Keeping assets in family-owned business to beat FAFSA for financial aid

BEEFjerKAY said:   luvbugium said:   My personal house will be paid off by the time my kids are in high school.

Another strategy I haven't seen anyone mention above is trying to maximize the aid by having all your kids in college at the same time.

The first is a very poor plan. CSS Profile looks at your equity in your primary residence (among other RE-related questions). Read the CSS Profile and you will get a real eye-opener in how people used to use RE to dodge college expenses.

The 2nd is an EXCELLENT strategy and one that I alluded to a few posts past when I mentioned strategic timing.

while i can see how this would help financially. having the oldest take a few years off to pull this off will have consequences. if you really have no other option in order to make it happen, then you are making the best of a tough situation. Otherwise you might open yourself up to all kinds of other problems.

It is possible to get very close to $10,000 (if not more) in federal grants. The Pell grant is the gateway grant, as all other grants require Pell eligibility.

The SMART grant, for instance, can provide an additional $4,000 for specific degrees (see: http://studentaid.ed.gov/PORTALSWebApp/students/english/SmartGra...

Another example is the FSEOG which can also provide an additional $4,000 for those with "exceptional financial need."

By my count that's up to $13.5k in a single year right there...

ltcm said:   If you have no income in 2013, and are an independent adult (I'm assuming you're not 17), then you would be helped in determining whether you can get grants. But again, even the grants that people jump up and down about will typically only cover partial tuition at a community college -- you're not getting tens of thousands of dollars of Pell Grants.

BEEFjerKAY said:   

Do:
- Max out your 401k, Roth and HSA. In the parent's names and those of the children. (To the extent legally allowable, of course)
- Do count on spending a fair amount of your child's middle school years learning (and if you have the impediment of being intensely logical, relearning) the college fin aid game, as then currently played
- Do have your plan in place by Christmas of your oldest child's 8th grade year
- If you have more than one child, think strategically about how and when they go to college
- Do consider spending down any 529s BEFORE Jan 1 of your child's senior year of high school.

Don't:
- Over contribute to 529s, especially 529s that do not have some sort of sweetener
- Keep money in 529s any longer than is necessary to accomplish your goals. In Illinois, that's 10 days.
- Do anything illegal. At the very least, it's unnecessary
- Put more money into any one savings vehicle than you can unwind in 5 years

Thanks for the tips, BEEFjerKAY! Your advice is appreciated.

I haven't looked at the CSS profile since applying to college more than a decade ago, but I took a look today and wow, it's pretty invasive. Much talked about exclusions to the FAFSA, such as retirement accounts, your primary home, small businesses under 100 employees, etc., are all asked about specifically. I'm looking at http://www.tuitioncoach.com/collegecost/pdf/cssProfile.pdf, although I understand it can vary by school, and many schools have their own more detailed supplements. Even siblings' assets are questioned!

For those of us with the benefit of a long planning horizon, the only strategies I can think of, short of early marriage for my kid, are:
- gifting money outside the immediate family
- sinking money into certain non-liquid assets: cars, boats, planes; art; jewelry
- not keeping any money at all in the kid's name
- increase income now, then plan to keep it as low as possible for the year or two before college

Who are the "folks who can help you successfully game those systems" that you suggest? How does one find these advisors?

This one student on college confidential (http://talk.collegeconfidential.com/financial-aid-scholarships/1349084-how-much-do-i-my-parents-pay-brown.html) posted that he/she only has a 5k annual contribution from Brown on a 60K total annual cost. Over the course of four-year college education, that's a savings of $220K. I don't know what college costs will rise to in ~15 years, but especially if we choose to have several kids, I don't know how we can afford not to at least do the math on this every year or two.

your already paying thru the nose to educate everyone elses kids,,they are called school taxes ,splost,,and lots of other ways they get it from you..and you are paying to educate everyone from other countries,,ie "illegal aliens"..its the way the system is set up...there are takers and there are makers..we are a nation of takers right now so get it while you can...........your kids are the ones getting the bill for it (and their kids)

BEEFjerKAY said:   BrodyInsurance said:    Because grandma owns it, for FAFSA purposes, it is a non-counted asset. The problem is that grandma is paying for college.

Not true for CSS Profile. Grandparent 529s are counted assets under that formula...

 

That's why I specifically said FAFSA. As a clarification of what you wrote, it isn't that Grandparent 529s are counted assets. It is that 529 plans with the student as beneficiary are counted assets.

Ex. Joe is going to college. Grandpa Sam owns a 529 plan with Sara as beneficiary. Uncle Tom owns a 529 plan with Joe as beneficiary. Grandpa Sam's 529 plan is not counted. Uncle Tom's 529 plan is counted.

Let's assume for a second that Grandpa Sam does own a 529 plan with Joe as the beneficiary. How honest should Sam's family be? Here's why I'm asking the question:

1) The 529 plan has $100,000. Another student has the exact same situation, but has no idea that there is a 529 plan with her as beneficiary. This student will get more aid simply because her grandfather elected not to tell her family.

2)Grandpa Sam has no legal requirement to use this money for Joe's college. In fact, Grandpa Sam plans on using only some of it for Joe's college and only if Joe gets straight A's.

Any thoughts on the following profile?

Let's say you manage to put almost all your assets into your retirement accounts and then retire early before your kids go to college. What will they make of your near total lack of taxable assets (expect for a house maybe)? Is this a desireable target to aim for, from an aid perspective?

luvbugium said:   dhodson said:   BEEFjerKAY said:   luvbugium said:   My personal house will be paid off by the time my kids are in high school.

Another strategy I haven't seen anyone mention above is trying to maximize the aid by having all your kids in college at the same time.

The first is a very poor plan. CSS Profile looks at your equity in your primary residence (among other RE-related questions). Read the CSS Profile and you will get a real eye-opener in how people used to use RE to dodge college expenses.

The 2nd is an EXCELLENT strategy and one that I alluded to a few posts past when I mentioned strategic timing.

while i can see how this would help financially. having the oldest take a few years off to pull this off will have consequences. if you really have no other option in order to make it happen, then you are making the best of a tough situation. Otherwise you might open yourself up to all kinds of other problems.

Well, I'm glad that I have at least one excellent strategy . I'll bite. What consequences? I understand that if students are working that a very large portion of their income will count against them. However, I suggested that she travel, live overseas with family or do service projects. My husband is from one of the poorest counties in the world and spending some time there digging wells or teaching English would not only be good service, but would help her understand her heritage. Hopefully it would build character and be something significant on her resume. It would also require her to be completely bilingual since no one there speaks English (not even the the English teachers) Most colleges easily defer acceptance for a gap year. So what situation have I not thought of?

I will read the CSS Profile. Thank you.

I am not trying to be rude or cruel but the things im mostly concerned with are non financial. Beyond some of the health risks of working in one of the poorest countries in the world, when you displace someone from their peer group it can result in experiences that may not be desireable. Even ignoring the worldly education piece, the folks that i graduated with who took time off to make enough money to pay for college never went to college. Now that may or may not be a bad thing if you can convince yourself that these individuals would have not benefited from a college education anyway but when you take a 17 year old and have them hang out with other non enrolled college 17 year olds things can happen and the plan of getting that education may be harder to pursue. As ive mentioned before, i think some people have tough choices and these kind of choices maybe the only or best option but i wouldnt want to displace my child from a relatively straightforward track without seriously considering this. You mentioned 1 year but many people have more than a 1 year gap between kids which would increase my concerns of negative things happening.

only if you can live off that amount which seems unlikely.

its not very likely that you have a ton of money set in either a roth or traditional account, have no assets that do count, and can live off the small amount you take out which doesnt affect your financial aide and then after college live the good life.

just talking traditional accounts first, if already in retirement you would have to pull out in essence a bunch more the years prior. This would likely increase your tax rate and possibly defeat the tax deferred benefit. Unless you are having kids later in life and have a bunch already saved and are willing to live very frugal for 6 years, most people cant pull this off.

given the roth limitations, hard to stockpile a bunch of money over the 18 years of your kids life (most people really have a tough time the first few years with the additional kid expense anway). Maybe you could roth convert if the option exists at that time but im still skeptical.

If you are thinking of temporary retirement, hopefully you feel good about being able to get your job back post your mini retirement. Id imagine a deferred compensation package might be a better option if you could find someone to offer that to you.

dhodson said:   luvbugium said:   dhodson said:   BEEFjerKAY said:   luvbugium said:   My personal house will be paid off by the time my kids are in high school.

Another strategy I haven't seen anyone mention above is trying to maximize the aid by having all your kids in college at the same time.

The first is a very poor plan. CSS Profile looks at your equity in your primary residence (among other RE-related questions). Read the CSS Profile and you will get a real eye-opener in how people used to use RE to dodge college expenses.

The 2nd is an EXCELLENT strategy and one that I alluded to a few posts past when I mentioned strategic timing.

while i can see how this would help financially. having the oldest take a few years off to pull this off will have consequences. if you really have no other option in order to make it happen, then you are making the best of a tough situation. Otherwise you might open yourself up to all kinds of other problems.

Well, I'm glad that I have at least one excellent strategy . I'll bite. What consequences? I understand that if students are working that a very large portion of their income will count against them. However, I suggested that she travel, live overseas with family or do service projects. My husband is from one of the poorest counties in the world and spending some time there digging wells or teaching English would not only be good service, but would help her understand her heritage. Hopefully it would build character and be something significant on her resume. It would also require her to be completely bilingual since no one there speaks English (not even the the English teachers) Most colleges easily defer acceptance for a gap year. So what situation have I not thought of?

I will read the CSS Profile. Thank you.

I am not trying to be rude or cruel but the things im mostly concerned with are non financial. Beyond some of the health risks of working in one of the poorest countries in the world, when you displace someone from their peer group it can result in experiences that may not be desireable. Even ignoring the worldly education piece, the folks that i graduated with who took time off to make enough money to pay for college never went to college. Now that may or may not be a bad thing if you can convince yourself that these individuals would have not benefited from a college education anyway but when you take a 17 year old and have them hang out with other non enrolled college 17 year olds things can happen and the plan of getting that education may be harder to pursue. As ive mentioned before, i think some people have tough choices and these kind of choices maybe the only or best option but i wouldnt want to displace my child from a relatively straightforward track without seriously considering this. You mentioned 1 year but many people have more than a 1 year gap between kids which would increase my concerns of negative things happening.

I don't think your rude. I've thought of these things too and I agree that financial concerns are secondary. If my child didn't want to do this or simply wanted to live with my sister in law for a year in Paris and study French I would be fine with that. If she was dying to go to college when she was 18 I would go with that too even if it wasn't as financially advantageous. But Africa is also an option that I can offer her. I was a Peace Corps volunteer for almost four years and married a local and we visit there as a family regularly. Being a volunteer there changed my life and my perspective in an incredible way. Once you have lived with people who live on 50 dollars a year, you never spend money the same way. It's not for everyone and it might not even be for my children but it's an option with a lot of possibilities and promise. The Africans value education most of all. Public school is not free so most families can only afford to send one child to high school. The rest of the children work in the fields to support the child in school and in turn he will support his (it's almost always a boy) family when his education merits him a better job. If his grades falter the family will take him out of school and put in another child that they feel is suited towards academics. Talk about pressure. Finally I want to emphasize that my husband are from there and my children have citizenship. This is not a random place that I have picked from a globe.

As far as risk of disease... well, there are risks with everything. You could get raped or meet a drug dealing boyfriend in your dorm just as easily as you could catch Guinea Worm in Africa. She's going to the best all girls private college prep school in the state (free tuition from my job) so the chances of her hanging out with kids who don't value education are minimal.

Everyone has their own experiences. I went straight from high school to college and didn't do as well my Freshman year because I was burned out. I should have taken a break. I did take a break between undergrad and grad school. After living in the real world for a while, I was ready to come back and take academics by storm. My children will also have their own situation and I think that a gap year (yes, only a year) could make them value education more but we will have to see when the time comes. Financially, it might mean a lot fewer loans for her.

I thought I would add one more strategy to the discussion. When I was in high school I decided on my dream school, applied early decision, was accepted and then worried about how to pay for it. Now as a high school teacher I see students apply to more than a dozen schools, receive their financial aid package offers and go with the money. Many parents are having a conversation with their kids like, "Yes, you were accepted to St. Andrews in Scotland and I know that sounds very fun but Grinnell has offered you a significant financial aid package and it's a good school so you should go with that."

BrodyInsurance said:   nebraskacornhusker said:   I work in higher education and can answer these questions. The government uses a black-box formula to determine need for education. They expect a percent of parent income to go towards their childrens education, it matters not if you are a parent that is not helping your kids out, your income is counted. The government expects a great percentage of a childs income to go towards their own education. There's no real way to hide money in your immediate family, however, if you create a 529 account or something similar in a grandparents name, it does not show up on fafsa, so that's one way you can hide funds.
There are two type of stafford loans that are federal loans. These are subsidized and unsubsidized. The different is that a subsidized student has it's interest paid while the student is in college, the unsub does not...it garnishes interest while the student is in school. Repayment starts 6 months after graduation unless they are deferred. Any student that does a fafsa in the united states automatically qualifies for a stafford loan. These loans are in a students name only, there's no co-signer. The interest rate is 6.8% for the 2012-13 school year, but this rate may change due to legislation this summer.
This is my area of expertise, if there are any questions I'd be happy to answer them.

If you are going to do something in a grandparent's name, it doesn't have to be in a 529 or something similar. It is grandma's asset and is uncounted. This creates two problems.

1)It is grandma's money and she can do anything that she would like with the money.
2)Using this to pay for school will negatively impact aid the following year.

If part of the package is loans -- especially subsidized loans -- you can wait until after the kid graduates to pay them off.

biomedeng said:   nebraskacornhusker said:   Schools with large endowments are moving towards a flat discount. By that, I mean that students below a certain EFC are allowed to attend school fee-free. Usually they have to pay for books and things like that. Ivy-Leagues and similar are headed this direction.
A flat discount would be a school that discounts tuition substantially below their peers such that it is a bargain to go there for everyone, regardless of their income. Rice in the 90s and early 2000s was one such example.
Allowing students with sub 60K household income to attend for free is basically a PR stunt to make the school look good. Most kids below the income limits would have had an EFC that would have only been 5-10% of the 50K tuition. So instead of charging them 5,000 you instead let them come for free which is a relatively small cost to make the school look good. Meanwhile you can raise tuition for everyone else by a couple thousand to offset this.

The real issue with Rice was that they have such a high ratio of applicants to accepted students that regardless of what games they play at the back end they can control how many low income students get in through selectivity. The process (in the mid 90s) included personal interviews -- mine was an alumni in Frankfurt Germany and was held at his office at Goldman Sachs. I was in my dress uniform, too...

First thing their admissions told me was not to worry about the tuition cost, that it could be worked out. (I was 25 and getting out of the military so what my income level was should be obvious)

I didn't make the cut, I believe the 'thanks for playing' letter said it was 1:18 that year who applied were admitted.

biomedeng said:   The only thing that would be dumb is to save in a 529 in lieu of maxing out your ROTH & 401k.

... whicn, in my experience, is what 95% of families do. They figure they don't have enough to fund either their retirements or college savings adequately, so they put some random percentage in retirement and some in 529s.

FWIW, the info in this thread would be a whole lot more beneficial if each poster identified whether his advice applied for FAFSA or CSS Profile.

For instance, if little Buffy owns a house, FAFSA doesn't care. CSS Profile does.

mimi6789 said: Unfortunately, many financial aids are based on prior year's income. So, you will likely be out-of-luck if you lose your job anytime in the year you apply for financial aid. You will be at their mercy if they will use your current year lower income (the year you apply for aid) for aid determination.

I don't know why I am getting so many reds here.

Brown University just turned down our appeal to revise financial aid due to loss of family income this year. They insisted that they use prior year's income (2011) for current school year (2012-2013) financial aid calculation.

Brown University did that to us last year too, insisting they only used prior year income for aid calculation, until we told them that we were considering 3 other ivy league schools with better, generous financial aids (those other schools considered drop of current year income and revised the aid package immediately). We had to show Brown the other aids in order to have a "match". Once you are in, there is mot much leverage to negotiate the aid.

Sure, it is a manual process and it is reviewed by a human being. So, you will be at their mercy if they do or do not want to consider your drop of income the year you apply for financial aid.

MelissaB said:   My daughter is a junior and has the scores for the ivy league, and we're hoping my son (8th grader) will follow in her footsteps. We are visiting 2-3 ivy league schools plus some other small liberal arts colleges for my daughter in July on our summer vacation/visit to the inlaws. It would be great if you can point me in the right direction of those folks in the know.

BEEFjerKAY said:   arktc said:   I think any school that gives any meaningful financial aid (e.g. Harvard, Yale, Princeton, etc.) has a more sophisticated process than you're suggesting and what OP's suggesting isn't nearly enough.

I am quite familiar with those schools and their forms and processes.

There is a level of financial aid disclosure that goes beyond even CSS Profile. Even then, it's just one more set of hurdles to jump.

If your child is really destined for those schools, there are folks who can help you successfully game those systems.

The best direction for someone like you with really smart, ivy-league-worthy kids is to AVOID going to the IVY schools. Those schools will have thousands of applications from smart kids like yours, they don't need your kids so they have little to no incentive to offer them anything close to a decent fin aid package of grants and scholarships. The prudent thing is to aim for schools that are a tier (maybe even two) lower, but are still well respected. Those schools would tend to offer much more academically-based grants and scholarships to make it worth going. Trust me, I was one of those ivy-league-worthy kids, got into Cornell (with bare minimum offered in grants/scholarships), but decided to go elsewhere instead (another tier one private research university, which ended up offering me ~80% in grants/scholarships). I can say that 10+ years after graduating, not going to Cornell has not made a difference at all in my career path. Nowadays, there really isn't much of a difference between going to an ivy or a tier-one university, it's what you do at the school that matters most (i.e. internships, etc.).

PsychoFan said:   MelissaB said:   My daughter is a junior and has the scores for the ivy league, and we're hoping my son (8th grader) will follow in her footsteps. We are visiting 2-3 ivy league schools plus some other small liberal arts colleges for my daughter in July on our summer vacation/visit to the inlaws. It would be great if you can point me in the right direction of those folks in the know.

BEEFjerKAY said:   arktc said:   I think any school that gives any meaningful financial aid (e.g. Harvard, Yale, Princeton, etc.) has a more sophisticated process than you're suggesting and what OP's suggesting isn't nearly enough.

I am quite familiar with those schools and their forms and processes.

There is a level of financial aid disclosure that goes beyond even CSS Profile. Even then, it's just one more set of hurdles to jump.

If your child is really destined for those schools, there are folks who can help you successfully game those systems.

The best direction for someone like you with really smart, ivy-league-worthy kids is to AVOID going to the IVY schools. Those schools will have thousands of applications from smart kids like yours, they don't need your kids so they have little to no incentive to offer them anything close to a decent fin aid package of grants and scholarships. The prudent thing is to aim for schools that are a tier (maybe even two) lower, but are still well respected. Those schools would tend to offer much more academically-based grants and scholarships to make it worth going. Trust me, I was one of those ivy-league-worthy kids, got into Cornell (with bare minimum offered in grants/scholarships), but decided to go elsewhere instead (another tier one private research university, which ended up offering me ~80% in grants/scholarships). I can say that 10+ years after graduating, not going to Cornell has not made a difference at all in my career path. Nowadays, there really isn't much of a difference between going to an ivy or a tier-one university, it's what you do at the school that matters most (i.e. internships, etc.).

Its always hard to know if it makes a difference or not. I did go to Cornell and i to this date still feel it helps me 20 years later. There isnt a week that goes by that a patient doesnt comment on the fact that i went to Cornell and that doesnt even consider getting into med school or residency.

Kat009 said:   arktc said:   SUCKISSTAPLES said:   Beef can you send me the cliff notes ( I have no need, but my gf is attending Harvard grad school and I'm very outdated in my college loan gaming knowledge - I seem to recall rules differ for ppl over 25)

Grad schools don't always operate in the same way, especially since they assume that many people should get loans on their own. Ivy League grad schools can give merit aid, unlike Ivy League undergrad programs, for example. That's not to say there aren't things you can do nonetheless, but it's less likely to work in all cases.

You shouldn't have to pay tuition for grad school...even at Harvard. Well, I'll make an exception for HBS. Enroll in a funded PhD program and then leave early with a master's if so inclined. Alternatively, get a job at Harvard and then use the tuition benefit to take courses.

Certainly the case if you're in a PhD program. Ivy League schools generally have more funded PhD programs available than other schools, and usually pay massive stipends for teaching, particularly in the sciences/engineering because those have the most federal funding available. When SIS said "grad," I assumed he actually meant JD, MBA, or MD because those are the majority of non-undergrad people at Ivy League schools that usually have to pay tuition.

dhodson said:   mikef07 said:   So then what does one do in a situation like mine?

Income - Slightly over $300K combined
3 kids ages of - 7 mo, 7 yrs, and 9yrs.
Have around $100K in two different 529s ($50K each)
Mortgage with $350,000 balance.

Can BEEF (or anyone else) point me in the right direction?

id just keep adding to the 529 plans. I would prioritized maxing out my 401k. ira, or other qualified plan and make sure the mortgage is on track with a low interest rate as well. I seriuosly doubt that someone is going to give you some serious break by gaming the system by the methods noted in this thread. I dont blame you if you try, just i doubt it is really going to work and be worth it. Im in a similar situation with good income and 3 kids only unfortunately closer to college age.

529s were established by states under the prodding from colleges/universtities as a way to harvest previously inaccessible money from parents, grandparents and relatives under the guise of savings for college.

At this time contributing to 529s is a bad idea in nearly every state if one goal is to minimize the outlay of ones cash for college education.

arktc said:   Kat009 said:   arktc said:   SUCKISSTAPLES said:   Beef can you send me the cliff notes ( I have no need, but my gf is attending Harvard grad school and I'm very outdated in my college loan gaming knowledge - I seem to recall rules differ for ppl over 25)

Grad schools don't always operate in the same way, especially since they assume that many people should get loans on their own. Ivy League grad schools can give merit aid, unlike Ivy League undergrad programs, for example. That's not to say there aren't things you can do nonetheless, but it's less likely to work in all cases.

You shouldn't have to pay tuition for grad school...even at Harvard. Well, I'll make an exception for HBS. Enroll in a funded PhD program and then leave early with a master's if so inclined. Alternatively, get a job at Harvard and then use the tuition benefit to take courses.

Certainly the case if you're in a PhD program. Ivy League schools generally have more funded PhD programs available than other schools, and usually pay massive stipends for teaching, particularly in the sciences/engineering because those have the most federal funding available. When SIS said "grad," I assumed he actually meant JD, MBA, or MD because those are the majority of non-undergrad people at Ivy League schools that usually have to pay tuition.

I interpreted 'grad' school as a non-PhD, non-MD, non-JD master's degree. When people talk about law school or med school, they usually say so specifically and don't call it 'grad' school. Non-PhD graduate degrees are programs like master's in education, public health, public policy, MFA, social work etc etc. These programs have barely any funding and are very expensive. They're basically cash cows for the universities that are held in much lower regard than earning a BS, PhD, MD, JD or MBA at the same institutions. Not really worth the money, IMHO.

BrodyInsurance said:   
In general, the answer is "yes". As I've previously said, the issue with using this sort of strategy is more than just about trust. Having money in the 529 plan means that grandma has assets.

Here's an example:
Through some "creative" planning in 2012, Grandma and Grandpa acquire and put $120,000 into a 529 plan with Junior, age 12, as the beneficiary and Grandma as the owner. The intention of this money is only to play financial aid games and Grandma is never going to touch this money. Because of 5 year gifting, this has no tax ramifications (assuming the grandparents live for 5 years).

It is now 2018 and the value of the account is $180,000. From a gift and estate tax standpoint, Grandma and Grandpa made gifts of $13,000 for the years 2012-2016 inclusive. None of that money is in their estate if they die. However, from a Medicaid standpoint, Grandma and Grandpa still have $180,000. They won't be eligible for Medicaid.

Now assume that they don't need Medicaid at that point. Assume that they use $90,000 of this in 2018 for QHEE and the other $90,000 in 2019? In 2020, grandma is sick and applies for Medicaid. They have no assets. From a Medicaid standpoint, Grandma made $90,000 worth of gifts in 2018 and $90,000 in 2019 and these gifts will stop her from being eligible.

with some careful estate planning... this *may* be resolved with grandma/pa creating a irrevocable trust in 2012 immediately after the acquisition. but who would be the executor? mommy and daddy? would the beneficiary be unnamed until the last minute?

unless the executors are someone else "trusted", you would be lying on the FAFSA application knowingly omitting the fact junior WILL be named the beneficiary.

.........

would the easier solution be skip grandma and grandpa and create an irrevocable trust (so that way you dont own the assets anymore). have grandma/pa be the executor and the beneficiary be......?

however i read that this setup is not foolproof as you are required to disclose ownership of trusts (by parent and children)?

When I get married this year I will have a 5yr old step daughter. Can we have the real dad claim her as dependent on taxes when its time for college and use only his income?